It’s time to rethink what it means to age in America. Why? For starters, take a gander at a few eye-opening fiscal facts.
For every dollar we spend on a child in America, we spend $2.40 on someone who is over 65. If the $68 billion education budget seems generous, it pales in comparison to the $480 billion annual price tag for Medicare. According to the Brookings Institute, this lopsided spending is only going to increase in the coming years, “rising to 7 to 1 if [we look] just at the federal budget.”
That assumes, though, that we’re operating on paradigms that position the aging as dependent, needful, and socially and economically obsolete. If baby boomers want to continue the proud national tradition of handing off a better America to each generation – and that tradition is in jeopardy – we need a fresh look at what it means to age. If boomers are going to take from their grandchildren at a seven-to-one clip, there isn’t much prosperity on the horizon, especially if we continue to assume a growing tax burden on those who are of traditional working age.
A conventional approach to work, tax and spend leads to an “age-warfare,” as reflected in a recent finger-pointing article in this month’s Esquire. Author Stephen Marche declares that boomers have waged a “war against youth” by creating a “gerontocracy” that is “bleeding up the national wealth” and “eating the young.”
Sound outlandish? Consider Marche’s jaw-dropping statistical evidence. In the last 25 years, older Americans have increased their wealth by 42 percent, while younger Americans have seen their wealth decrease an astounding 68 percent. In 1984, Americans over 65 made 10 times more than those under 35. Today, it’s 47 times more. And “a retiring couple with low-to-average wages” who pays a lifetime total of $510,000 in taxes will receive a whopping $821,000 in entitlements over their lifetime. And, as Marche points out, it will be the low-wage-earning Gen X-ers and millennials who are left to foot the bill.
Marche’s piece, while sobering, omits an understanding of how innovative a 21st-century demographically transformed America can be. The piece sees an economy with a fixed size that offers diminishing returns as more participate in it, a pie that must be divided into ever-smaller pieces as more people want a part of it. But this is not our experience in a growing economy based on markets, innovation and change. The pie does grow, and more people will have bigger shares. It happened with the women’s movement; it can happen again with population aging.
Leadership is needed to bring about new approaches to how the federal government taxes and spends based on a historic transformational shift in demographic make-up of “old” to “young.”And it is a change, of course, that is global, as recently articulated by Undersecretary of State Robert Hormats. Bottom line: The challenge of getting older Americans to be healthy, active, and productive members of the economy is an essential path on which true tax reform can be based – and how we can truly change this country’s approach to spending.